The lucky stroke crippled me and gave me a new life. Now I'm just unbelievably good looking and modest. Always turn a little to the left.

28 Aug 2013

Abbott spends, spends, spends. Could we see the bank balance please.

Huge cuts needed to fund Abbott's new spending

Date

August 27, 2013

8 reading now

Tom Allard, Matt Wade

Estimates based on treasury forecasts.

The Coalition will have to make swingeing cuts to government programs if it is to implement Tony Abbott's 10-year economic plan promising smaller government but massive new spending for defence, paid parental leave and the private health insurance rebate, economists say.

Unveiled at the Coalition's campaign launch on Sunday, many of the initiatives in the plan were not costed but the commitment to raise defence spending to 2 per cent of gross domestic product within 10 years will cost $35.5 billion in extra outlays alone over the decade to attain, a budget expert at the Australian Strategic Policy Institute, Mark Thomson, said.

By 2023-24, the annual defence budget would be $50 billion for the year to meet the 2 per cent of GDP goal, he said, compared to $24 billion currently.

Abolishing the means testing of the private health insurance rebate - which Mr Abbott said would occur ''within a decade'' - would cost $833 million a year in current dollars, and substantially more if implemented in the future.

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The paid parental leave scheme will cost $5.5 billion a year once it is up and running, two or three years after its introduction in July 2015.

Combined with Mr Abbott's undertaking to create smaller government and deliver a surplus of 1 per cent of GDP, also made at the campaign launch, Mr Thomson said an Abbott government would have to take an axe to other programs.

''It's entirely possible they could do it,'' Mr Thomson said. ''But there will have to be a lot of people receiving transfer [welfare] payments, handouts and research grants, and the like, who are going to have to lose out to make it happen.''

Mr Thomson's remarks echo those of Treasurer Chris Bowen, who claimed big cuts to health, education and family payments would be required to deliver the promises.

''Now without the magic pudding, without fairy dust, there's only one way all those things can be true - and that is real and significant cuts,'' he said.

The chief economist at Bank of America Merrill Lynch, Saul Eslake, said the Coalition's fiscal objectives should be viewed as only an ''aspirational goal'' that would only be achievable if the economy began growing rapidly.

''[Otherwise] there's not a lot of scope for them to find these sacks of money that are going to deliver them the savings they need,'' he said.

The opposition will reveal some of its savings this week, with the full costings not expected to be unveiled until the last week of the campaign.

Meanwhile, Fairfax Media has learnt the Coalition has prepared a detailed 30-page dossier of policies that will form a blueprint for its first term, should it win government.

Described by one Liberal Party insider as the work of an internal ''razor gang'', the document has been ready for almost two years, although it keeps getting refined ''endlessly'', largely due to repeated blow-outs in the budget.

''It's a 30-page policy document,'' Coalition finance spokesman Andrew Robb said. ''We have 30 areas of policy and we have done a lot of work on it. All of the spending and cuts would be released before the election.